N.D. can press on with lawsuit over coal-generated electricity

North Dakota's lawsuit against Minnesota over the right to sell new coal-generated electricity across state lines has survived its first legal skirmish.

A federal judge has ruled that North Dakota government, coal and utility interests have made a "plausible" case that a restrictive 2007 Minnesota energy law is invalid because federal law preempts it.

The ruling, filed electronically on Sunday by U.S. District Judge Susan Richard Nelson in St. Paul, dashed the Minnesota attorney general's efforts to derail much of North Dakota's lawsuit on legal grounds.

The suit, filed last November by the North Dakota attorney general, two coal companies, their trade association and three electric cooperatives, challenges Minnesota's Next Generation Energy Act. The law bars new coal-fired power plants in Minnesota and restricts out-of-state imports of new coal-based power generation unless the carbon dioxide is offset with reductions elsewhere. Coal burning by utilities is a leading source of such greenhouse gases.

The law affects North Dakota because the state has deposits of lignite coal, and wants to burn more of it in new power plants, then sell the electricity across state lines. Eight coal-fired power plants already exist in that state, including some owned by Minnesota utilities.

Neither state's attorney general would comment on the ruling Monday. Under the order, the remaining defendants in the lawsuit are the Minnesota Public Utilities Commissioners and the Minnesota Commerce commissioner.

"North Dakota has not proven its case -- and the judge is not saying that," said Beth Goodpaster, an attorney for the Minnesota Center for Environmental Advocacy, a St. Paul nonprofit that supports the Minnesota law but is not involved in the case.

Does federal law trump state?

Instead, the judge gave North Dakota a green light to argue its claims that Minnesota's statute is preempted by federal laws regulating air pollution and interstate electric sales as well as by the federal government's authority over the regional power grid.

But the judge threw out two North Dakota claims alleging that Minnesota's law violated parts of the U.S. Constitution. A third constitutional issue -- over the Commerce Clause -- was not challenged on legal grounds by Minnesota, and remains at the heart of the case.

No trial date has been set. And the judge's 41-page order said more pretrial fact-finding is needed on key issues dividing the two states.

For example, whether Minnesota law "conflicts with the specific orders of" the Federal Energy Regulatory Commission, which has broad authority over the power grid, "cannot reasonably be determined" at this stage, the judge wrote.